Chapter 10: Commitment measures
Part III of this book reviewed the direct controls that increase the costs of working in the shadow economy and/or the benefits of operating on a declared basis. In Part IV, attention turns to indirect controls. In this chapter, the measures that encourage a psychological and social allegiance to compliant behaviour are introduced (Alm et al., 1995; Andreoni et al., 1998; Cullis and Lewis, 1997; Smith and Kinsey, 1987; Torgler, 2003; Weigel et al., 1987; Wenzel, 2002; Williams and Martinez-Perez, 2014d). In many societies, there is an incongruity between the laws, codes and regulations of formal institutions and the norms, beliefs and values of informal institutions. Shadow work takes place when the norms, values and beliefs differ to the laws, codes and regulations. To tackle the shadow economy, therefore, a reduction in this institutional incongruence is required. Two options exist. On the one hand, one can seek to change the norms, values and beliefs of the population regarding the acceptability of working in the shadow economy so that these informal institutions align with the laws, regulations and codes of formal institutions. On the other hand, one can also seek to change the formal institutions to align with the norms, values and beliefs of the wider society. The aim of this chapter is to review and evaluate the policy measures that seek to change both the formal and informal institutions in order to reduce the institutional incongruence between them.
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